Health care premiums to increase in 2001-02

By Michael Terrazas mterraz@emory.edu

In recent years, every insurance carrier and employer in America has been hard hit by sharply rising costs in the health care industry, and Emory is no exception. Over the past 24 months, the University has seen its health care costs rise a staggering 40 percent, while passing on only a 7 percent increase to employee premiums for EmoryCare and no increase for EmoryChoice.

Emory’s rate increases for 2002 will be 19 percent for EmoryCare and 9 percent for EmoryChoice; employees will learn the exact dollar amounts of rate increases for their particular plans through an early October mailing from HR.

Alice Miller, vice president for University Human Resources, said much of the rising costs can be attributed to prescription medications. As new drugs come on the market—complete with a 10-year patent that prohibits cheaper, generic equivalents from being manufactured—consumers rightly demand access to the medications, but that access comes with a price. Miller said pharmacy costs are up 20 percent in recent years, while medical costs themselves are up 10 percent.

Although actual cost increases per doctor and/or hospital visit have been modest and often negligible over recent years, the combination of increased use of medical services, like the increased use of new drugs, has helped raise costs.

As a result of these ballooning costs, employers nationwide are forced to make sharp hikes in insurance premiums. In higher education, for example, the University of Miami plans to raise employee rates by 45 percent in 2002, while other universities report employee rate increases anywhere from 18 percent to 44 percent. Locally, Miller said, nearly all major employers will be increasing employee health premiums.

The national benefits firm Hewitt Associates was quoted recently in USA Today predicting that employee premiums nationwide are expected to increase by an average of 13 percent, though some companies may raise rates by 20 percent and even up to 50 percent. Aside from a 20 percent increase for EmoryCare in 2000, the University has largely held the line on employee premiums in recent years, with rate increases of less than 10 percent and even zero in some cases.

“The cost savings that were generated by the creation of managed care, HMOs and PPOs have evaporated,” Miller said. “It was only a matter of time until the demand for additional services exceeded any savings for managed care.”

Premium increases in 2002 for Emory health plans are needed to cope with higher costs. Despite the increases, Emory will shoulder even more of employees’ health care burden in 2002; the University will pay more than 80 percent of single coverage and more than 65 percent of family coverage.

Historically, Emory has picked up about 70 percent and 50 percent, respectively, of these costs.
Employees will have the opportunity to register for flexible spending accounts or change health coverage during the Open Enrollment Period in November.

Other changes in the health care plans include:

• The copayment for the third tier of prescription drugs (nonformulary brand-name drugs) will rise from $30 to $35.

• The retail copayment for maintenance drugs under EmoryChoice will be raised to one copayment per 30-day supply. (90-day supplies of maintenance drugs will still be available through mail order for one copayment for both insurance plans)

• In EmoryCare, hospital coinsurance for in-network hospitals will be raised to 20 percent for non-Emory hospital. Coinsurance for Emory Healthcare and EHCA hospitals now will be 10 percent.

Also, University HR worked aggressively with Aetna to add more than 100 primary and specialty care physicians to the EmoryChoice network, including physician groups in Newton and Rockdale counties, and there are changes in store for Emory dental plans, as well.

“We know that many people have had difficulties with service and access under the dental plans,” Miller said. “In response to your feedback, we have selected a new vendor for both the dental HMO and traditional plans. Both plans will be switched to Aetna, and we expect this to provide better service.”

Miller said Emory will continue to offer the CompBenefits Dental Access plan, giving employees three choices for dental care. She said premium increases for dental plans will rise anywhere from $1 to $4 per month, depending on coverage.

Go here for prescription cost comparision chart and tips on how to cut health care costs.